One of the more troublesome problems that a merchant who sells merchandise to a customer must address is handling returns of merchandise sold to a customer. This problem is particularly significant for merchants who sell online to Internet customers, or through catalog orders, since such merchants typically do not have a local facility at which the merchandise can be physically returned by a customer. Yet, even for conventional “brick and mortar” businesses, the problems associated with handling returned merchandise can be a tremendous burden. An independent survey has determined that 30% of online retailers believe their biggest fulfillment challenge in the year 2001 will be accepting online returns. The importance of this issue should be fully appreciated, since 47% of those surveyed have indicated that they choose not to shop online because they can't return items easily. Whether a shopper is returning merchandise purchased online, or through a catalog transaction, or from a conventional store, the inconvenience of the process can have a significant adverse effect on customer loyalty. Providing prompt and efficient handling of returned merchandise helps to ensure the continued patronage of customers.
Several aspects of handling returned goods cause most of the problems for merchants. A merchant must provide personnel and facilities for processing and handling returned merchandise, which can add substantial overhead to the operation of a business. When goods are returned, they must be checked to determine their condition and to determine if the customer has actually returned the goods purchased from the merchant, or has omitted any portion of the goods that were to have been returned. These steps are essential to ensure that the customer is promptly credited for the cost of the returned goods, but is not credited if the condition and/or contents of the merchandise received are not in accord with the merchant's returned goods policies.
Assuming that a customer returns the goods that were originally purchased by the customer in an acceptable condition, the merchant must determine how to dispose of the goods. This aspect of handling returned goods can be particularly troublesome, because most merchants are not properly equipped to deal with returned goods that cannot be simply reshelved for resale. In some cases, the condition or nature of the goods will preclude them from being repackaged for resale. In other cases, a portion of the returned goods may be salvaged, but the remainder will need to be discarded in an acceptable manner. For other situations, a merchant will prefer to donate the returned goods to an acceptable charitable cause, thereby enjoying the benefit of a tax write-off for the value of the donation. Certain types of goods may represent an environmental hazard if improperly disposed of and will require special handling, in accord with criteria set forth for toxic or hazardous waste. Most merchants do not have the facilities or staff to assess the condition of returned merchandise and to carry out the steps that need to be taken for appropriate handling of the returned goods. Accordingly, it will be evident that it would be preferable to provide a centralized returned merchandise handling agency to process returned merchandise for a plurality of different merchants. Such a centralized agency will be able to more efficiently process returned merchandise than could any individual merchant.